Business travel expenses are high for most companies. Whether you have clients across town or across the country, there’s probably some amount of travel required for your organization’s day-to-day operations.
So, how can you ensure you and your employees get where you need to be, and do what you need to do, and stay within a budget?
The good news is that, while it may be necessary to go to your clients’ offices in other cities to seal deals, you can keep travel costs under control.
Generally, the five biggest expenses that fall under the heading of business travel include airfare, lodging, car rental, meals and the cost of reporting and processing these expenses. These categories are where you can make your biggest dent when it comes to controlling costs.
Here are nine hacks to help you and your team control business travel expenses:
Create a business travel policy
The single best way to get a handle on your company’s business travel expenses is the least exciting.
Regardless, you should create a company travel policy that outlines how you want business travel to be handled. Otherwise, employees will be free to do what they prefer, and that can cost you money.
And lots of it.
Your company’s business travel policy should include:
- Rules for making airline reservations
- Details about meals and entertainment, including any per diem
- What expenses will be reimbursed, and which ones won’t be
- Your company’s preferred airline, hotel chain and car rental company
- Whether employees must use a designated travel agency or vendor
- Whether travel expenses must be paid for on a company credit card
For example, your business travel expenses policy should outline if your company only pays for economy class airfare tickets, and that any upgrades are paid for by the employee. Also, spell out whether the company will pay for overweight bags, airline lounge memberships, in-flight Wi-Fi, airport parking, taxis and other incidentals.
It’s a good idea to include your business’s travel policy as part of your employee handbook, for easy reference.
Keep your travel policy flexible
It’s important you keep your travel policy flexible enough that it encourages creative thinking among your employees.
After all, if someone wants to use a vacation rental website and save the company $100 a night over what the designated hotel chain is offering, you should probably empower them to do so.
While one road warrior may simply prefer to call the travel agent and get a direct flight at a set date and time, another employee may enjoy the challenge of researching cheaper alternatives to airfare and hotel.
Plus, new mobile apps and discount websites appear on the horizon almost daily. Your travel policy should encourage, rather than discourage, the use of additional discounts and other cost-saving behavior in your business travelers.
A little flexibility can also help accommodate the international travelers more comfortably. For instance, your company may want to allow premium economy class airline tickets for trips that are five hours or longer.
Or, you may agree to pay for exit row upgrades for employees who are taller than a certain height.
Use company credit cards that earn rewards
If your company doesn’t already use corporate credit cards that earn airline miles or cash back, you’re missing a major opportunity to supplement your travel budget and reduce your business travel expenses. You can collect those airline miles or cash and use them to buy more airline tickets for business trips.
If you set up company purchasing cards, or P-cards, you can set limits to what and how much can be bought using the card. For instance, your office manager who never travels can still use her P-card to buy office supplies and earn cash back or reward miles to supplement your travel budget.
Keep in mind that any airline miles earned for purchases are different from the miles earned by the individual traveler for the flight itself. Many companies allow employees to keep the reward miles they earn from the airline for actual flights, in recognition of the hardships of being away from home.
An important note: This recommendation assumes your company pays off its credit cards in full every month and isn’t accumulating hefty interest fees.
Be smart about using earned miles
A good rule of thumb is that each airline mile earned is worth about a penny. So, 25,000 miles is equivalent to a $250 ticket. When you’re deciding whether to cash in your airline miles, it’s important to do the math.
If a ticket will cost 25,000 miles or you could pay $195 cash, it’s more cost-effective to buy the ticket outright. Conversely, if the ticket will cost $450 or 25,000 miles, then it’s better to use your miles.
When you do your part to maximize your rewards, you’ll help ensure you always get more bang for your travel buck.
Automate your expense management process
After creating a travel policy, the next-most-important thing you can do to control business travel expenses is to fine-tune your expense management and reimbursement process.
If you’re still using Excel spreadsheets to process travel expenses, you’re leaving yourself open to problems. You’ve probably heard the horror stories of companies that have had to eat thousands of dollars in travel expenses that were processed after they’d sent their final bill to a client.
It happens. But it doesn’t have to happen to you.
An integrated expense management platform that works with your business’s accounting process can help prevent such disasters. You’ll be able to easily track expenses and payments, and keep everybody on the same page when it comes to cost control.
With a fully automated, robust, online reporting and reimbursement system, your business travelers can upload expenses easily on their smartphones throughout their trips. The system will prompt their supervisors to approve the expenses and then automatically send the expenses to the accounting department.
Accounting can then more quickly process the reimbursement whether it’s to be billed to the client, tied to a particular account, or reimbursed on the employee’s next payroll check. That will help you improve cash flow.
Discourage last-minute trips
Last-minute trips to visit clients (or bring them to your office) can really drive up your business travel expenses. That’s why it’s important to encourage employees to make airfare reservations 21 days in advance when at all possible. You’ll usually find your best fares this far out. Two weeks in advance is your next-best option.
In addition to saving the company money, the further in advance trips are planned, the more options you’ll have for available routes and flight times. This gives your business more breathing room for scheduling meetings and events – and the weary business traveler a chance to maybe get back home in time for their son’s soccer game.
When last-minute trips can’t be avoided, encourage employees (or the team member who handles your office’s travel bookings) to check websites that offer last-minute deals on airfare and hotels.
Bring clients to your office
Consider whether it would be more cost-effective to invite your customer to come to you, especially if several team members need to meet with them. That way, you’re covering travel, lodging and meals for one person, not a group of people.
It can be highly valuable for your clients to meet the larger team, tour your facility, and establish relationships with people other than the CEO and their sales representative.
After all, people prefer to buy from folks they like and with whom they have a relationship, rather than an anonymous voice on the phone. Not to mention the added advantage of reducing your business travel expenses.
Hire a travel agency
That’s right. Travel agencies are making a comeback because they’ve reinvented themselves as “travel vendors” who can save your company money.
Particularly if your company’s business travelers have complicated itineraries that involve multiple cities over many days, a travel agent can help your company optimize its travel budget.
Plus, you’ll be building a relationship with another business that can serve as your company’s travel concierge of sorts. The convenience factor will likely save your employees a great deal of time over the long term, which ultimately translates to dollars saved.
Train novice travelers on ways to save
Employees who don’t travel in their personal lives or are new to business travel can benefit from learning some basic tips and tricks of the road (or skies).
You may want to offer a short outline or webinar to your staff on controlling business travel expenses, with tried-and-true best practices such as:
- If possible, don’t check bags for short trips.
- Consider traveling to nearby smaller, regional airports rather than into the big-city hub.
- Invite clients for breakfast or lunch meetings rather than dinner meetings when feasible.
- Ship samples to the client rather than packing an extra bag or creating an overweight bag that will incur additional airline fees.
- Always call the hotel directly to get the best rates. The rates available on well-known aggregator sites often include a markup.
- Sign up for airline, hotel and car rental frequent customer programs in order to collect reward points, get discounts, and sometimes, obtain access to lounges.
A final bit of advice: A reputable professional employer organization (PEO) or certified professional employer organization (CPEO) will offer the technology solutions and personalized service to help you control all your business expenses, including travel.
Want even more scoops on optimizing costs for your business? Download our free e-book, HR outsourcing: A step-by-step guide to professional employer organizations (PEOs).